Goldman chief David Solomon opines on IPO revival, the sale of GreenSky and the challenge of a 'lousy' economic environment

By Steve Gelsi

Goldman's David Solomon sees more confidence in capital markets overall than a year ago as ARM Holdings readies a blockbuster IPO

Goldman Sachs chief executive David Solomon said this week's blockbuster initial public offering from ARM Holdings could create a "virtuous cycle" of bringing more pent-up backlog to Wall Street.

Speaking Tuesday at the Barclays Global Financial Services Conference, Solomon said, "There's no question that the environment for capital markets activity is improving," ahead of the expected of ARM Holding's initial public offering, which may value the chip designer at up to $55 billion.

Goldman Sachs (GS) is one of the lead underwriters of the IPO from the chip design firm that's backed by SoftBank Group Corp. .

"From everything I hear, that's going well," Solomon said about the ARM Holdings deal. "We have a handful of very significant IPOs in the market. That's an improvement."

Solomon, who has brushed off press coverage of dissent in the ranks at Goldman Sachs, said the firm is focused on restructuring its consumer business, including the sale of its GreenSky lending unit.

"I don't have anything other to report [on the GreenSky sale] other than when we reach a conclusion, we'll report, but we feel good about where we are in that process and more to come on that," Solomon said.

Solomon said he's amazed at times at the attention that Goldman Sachs gets, particularly in a string of articles with comments from current and past insiders at the firm who criticized the direction of the company and the turnover among partners.

"I would certainly agree there's been a lot of headlines," he said. "There's nothing that's going on in the context of partner transitions that's different than any other cycle."

Solomon also echoed themes voiced by JPMorgan Chase & Co,'s (JPM) chief executive Jamie Dimon against stiffer capital requirements being proposed for banks.

Also read:JPMorgan Chase CEO Dimon says consumers are good, new banking regs are bad

"When you look at this, you have to ask the question, what are we trying to do?" Solomon said. "What are we trying to accomplish? And if the answer to that is to make the system more safe and sound, it's not clear that more capital is the best answer to that."

While Goldman's losses in consumer banking have drawn low marks for the firm, Solomon argued that the moribund capital markets and M&A environment were a bigger headwind to Goldman's business.

The current year has been a "pretty lousy environment for our business," he said. "And you know, that had a greater impact on the performance of the firm over the course of the last year than the consumer business."

Overall, 2024 should be a better year for Goldman Sachs to generate profits from its consumer business and focus on its core trading and asset management practices, while the economic environment and capital markets improve, he said.

Goldman Sachs stock was up 0.6% in premarket trading on Wednesday. The stock has fallen 3.6% so far this year, compared to a 4.5% rise by the Dow Jones Industrial Average DJIA.

Also read:Goldman Sachs CEO David Solomon says he doesn't recognize 'caricature' that critics have painted of him

-Steve Gelsi

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09-13-23 0903ET

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